Alcoa (NYSE:AA) kicked off earnings season after the closing bell on Tuesday with a beat on both the top and bottom lines. However, the blue-chip aluminum giant chopped its 2012 global aluminum demand forecast to 6% from 7%, citing the ongoing “slowdown” in China. The warning sparked fears about the forward outlook for corporate profits.

"Expectations for earnings season are for a general slowdown in revenues, a reflection of the stagnation seen around the world," Chris Beauchamp, a market analyst at IG Index wrote in an email.

Analysts also said a report from the International Monetary Fund suggesting European banks may have to shed between $2.8 trillion and $4.5 trillion in assets as a result of increasing stress on the financial system weighed on sentiment.

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On the economic front, a report from the Commerce Department on wholesale inventories is due at 10:00 a.m. ET. Economists expect the measure to have climbed 0.5% in August from July. Later in the day, the Federal Reserve releases its Beige Book. The report provides an anecdotal look at how the economy is faring across the central bank's 12 districts.

Oil futures held steady after posting big gains in the prior session. The benchmark contract traded in New York dipped 3 cents, or 0.03%, to $92.36 a gallon. Wholesale New York Harbor gasoline rose 0.53% to $2.974 a gallon.

In metals, gold gained $4, or 0.23%, to $1,769 a troy ounce.

Foreign Markets

The Euro Stoxx 50 fell 0.42% to 2462, the English FTSE 100 dipped 0.4% to 5786 and the German DAX slumped 0.24% to 7217.

In Asia, the Japanese Nikkei 225 sold off by 2% to 8596 and the Chinese Hang Seng edged lower by 0.08% to 20920.